A shipping invoice is a legal document required to accompany products shipped to customers. They’re also considered important accounting documents to businesses because they record and provide a detailed description of the products included in every shipment. They’re sometimes called freight invoices or trucking invoices because they serve as receipts for freight shipments.
A shipping invoice is also referred to as a bill of lading (sometimes abbreviated BOL). A bill of lading lists the types of products shipped, the corresponding prices for the items, and the cost of shipping. It also serves as a receipt, a document of ownership, and a contract between the seller and the shipping company.
In this guide, we’ll discuss shipping invoices and bills of lading to ensure your shipments get to their destinations as smoothly as possible.
What Is a Bill of Lading?
A bill of lading is a required shipping document for every freight shipment. It contains information detailing the type and quantity of the products shipped, the total cost of the shipment, and the address of the final destination. The bill of lading is a legally binding document signed by an authorized representative from the shipping company, the shipper, and the consignee or the buyer.
There are a few types of bills of lading, depending on how you ship your goods. For those involved with international shipping, you might choose to ship by air or sea. If you’re shipping by air, the bill of lading might be referred to as an air waybill. For ocean transport, the bill of lading would be an ocean bill of lading.
Regardless of how it is referred to, though, a bill of lading is one of the most important documents in the shipping industry. It protects the rights of shippers, carriers, and consignees during all stages of the shipping process. A bill of lading serves three purposes, namely:
- Receipt of shipped goods: From the point of origin, the bill of lading serves as evidence that the products are transferred from the shipper to the carrier in good condition.
- Document of title: The bill of lading follows the title of ownership. Originally, the seller owns the goods. The responsibility for the care of the products is transferred to the carrier while in transit. And when the buyer receives the products and signs the bill of lading, the ownership of the shipment is fully transferred. The bill of lading will also serve as proof of delivery.
- A contract between the shipper and the freight carrier: The bill of lading serves as a legally binding contract that lays out the terms and conditions that the shipper and the carrier agreed on regarding the transport of the goods.
What to Include on a Bill of Lading
A bill of lading lists and includes a description of the items being shipped. It contains all the pertinent information that the carrier needs to accurately process the shipment, as well. Carriers usually use the bill of lading as an invoice because it includes the total charges for the shipping service.
The bill of lading generally answers the who, why, what, how, and when of the shipping process. Below are the essential components that should be included on your bill of lading.
Shipper’s Name and Contact Information
Make sure your business name and logo appear on the bill of lading. Double-check that your address, phone number, and email address are correct. You can also include your website if you have one. These are all essential information that your customer and the carrier would need to contact you.
Receiver’s Name and Contact Information
The bill of lading must also show the name of the recipient. If your customer is a company, you should include a company name and a contact person’s name. You must also have an address, phone number, and email address. These are details that the carrier must have to deliver the shipment to your customer.
Carrier’s Name and Contact Information
If there will be more than one involved in the delivery of the shipment, the names and addresses of all carriers must appear on the bill of lading. This is necessary to establish each party’s responsibility and receipt of the shipment.
Purchase Order Numbers and Other Reference Numbers
The purchase order number or any other internal invoicing identifier associated with the shipment must also be shown on the bill of lading. Including the purchase order number will make it easy for you to track and reconcile shipments to specific orders. They’re also used as reference points for the shipment to be accepted at delivery or released for pickup at the destination.
Delivery Instructions and Notes
This section is a key element to the successful delivery of the order. This is where you can include requests or special instructions for the shipping company, which could be anything from "call the recipient to pick up" to "deliver after 5 p.m. only."
Pick Up Date
This represents the date when the carrier picks up the products, and the responsibility for the care of the goods is transferred. You’ll need this date as a reference point to track your shipment. It’s also used to reconcile shipping invoices.
Item Descriptions and Details
There are laws that govern what can and can’t be shipped between state lines and country borders. So, to avoid delays and problems with your shipment, your bill of lading must include the quantity, description of goods, unit price, and the total value of each line item.
The bill of lading should include a packing list that includes the total number of containers you’re using for shipment and their gross weight and dimensions. It must also be noted if you’re sending cartons, crates, pallets, etc.
Freight Details and Designations
When filling in the bill of lading, make sure to input the correct details regarding the weight, dimensions, ease of handling, and value of your shipment. For example, you must specify if the shipment contains any hazardous materials because there are special protocols to handle the transport of such products. All of this information is also needed to calculate duties and taxes for your shipment and clear it through customs.
How Do Shipping Invoices Differ From Commercial Invoices?
A commercial invoice, also called a bill of sale, is an accounting document produced mainly for billing purposes. It is used to account for the price and quantity of goods sold in an international transaction. A commercial invoice is required for international and ocean freight shipping, as it’s used to calculate the duties and taxes associated with the shipment and clear it through customs.
A commercial invoice will contain information like:
- The name, address, and contact information of the buyer
- The name, address, and contact information of the seller
- Reference numbers (invoice number, order number, bill of lading number)
- A clear description of the products
- The total sale amount (number of units and unit price of each item)
- The number of packages and the total weight of the shipment
- Country of origin (manufacture) for each line item
- Shipping charges and additional fees (e.g., customs duties)
- Insurance costs
- Payment instructions and the due date
- The date of exportation, means of transport, and final destination
- The shipper’ s signature and date
Two factors differentiate a commercial invoice from a shipping invoice. First, a commercial invoice does not act as a title of ownership, even though it serves as a contract and proof of sale between the exporter and the importer.
Second, a commercial invoice is created primarily to identify the goods being shipped as required by customs to assess the value of the shipment. Duties and taxes are then imposed based on the evaluation.
How to Create a Shipping Invoice
Creating a shipping invoice is the last step between delivering the product and getting paid for it. It should be handled as professionally and on-brand as you have done with the previous steps of selling your product. Wrap up your customer’s experience on a high note.
Make sure your shipping invoices are simple, clear, and detailed. Shipping invoices generally require more information than other invoices that businesses create. Include all the necessary information about the size, weight, packaging, and contents of the shipment and important information needed for the invoice, like the invoice date and a unique invoice number.
In this digital world, email has become one of the best direct methods of communication. Embrace the technology with Skynova’s invoice template. With your customer’s email, you can send your invoice directly from the software without downloading anything. You can also view when the customer has opened the invoice, which takes the guesswork out of whether it was received.
You may also want to explore Skynova’s free downloadable bill of sale template. The template is customizable with your own logo. Simply input the description of the products you’re shipping, the value of the items being shipped, and sales tax when applicable.
Track and Manage Invoices With Skynova’s Invoicing Software
As a business owner, you wear multiple hats and have to focus on more than shipping invoices. Reduce your administrative workload and explore Skynova’s additional service offerings. Easily create documents from free, downloadable, and customizable templates available for various industries. We’re here to help you simplify the process of growing your business.